Pepsi to up China investment by $2.5 billion

PepsiCo Inc said it is planning to up its investment in China by $2.5 billion over the next three years, as it sees more growth in the market.

This new investment is apart from the $1 billion the cola and snack food giant had announced in 2008 that will be completed this year.

This investment reflects very clearly our great confidence in China and our long-term commitment to this very important, growing market, Chief Executive Officer Indra Nooyi said in a statement.

The new investment will be allocated to a variety of projects, including new manufacturing facilities, a significant scaling up of the company's research and development operations, expanded agricultural development and brand-building initiatives.

Pepsi, which currently operates 27 beverage and food plants and five farms throughout China, plans to open 10 to 12 new plants to manufacture soft drinks, non-carbonated beverages and snacks and will install additional production lines in existing facilities.

PepsiCo will open plants in the provinces of Fujian, Gansu, Henan and Yunnan in the next two years.

We are building expertise and infrastructure now so that we can have a strong, sustainable manufacturing and agricultural base to serve the diverse and growing needs of consumers across China, Nooyi, who is in Shanghai to visit the Shanghai Expo, said.

CEO Nooyi has been vocal about her plans to grow in emerging markets like China, India, Russia and Brazil, and earlier in March, she laid out plans to invest heavily in these markets, as well as in healthier products.

The company, which competes with Coca-Cola Co and Dr Pepper Snapple Group Inc , will also broaden its portfolio of Chinese-designed and developed products by providing more food and beverage choices made with wholesome ingredients that contribute to healthier eating and drinking.

As U.S. first lady Michele Obama pushes for marketing healthier food and curb childhood obesity, many food and beverage companies are now focusing on healthier options.

McDonald's Corp offers more grilled chicken and fresh fruit, PepsiCo is using whole grains in more of its snacks and Campbell Soup Co is lowering the amount of sodium in its Spaghettios pastas and V8 vegetable juices.

Pepsi shares closed at $63.86 Thursday on the New York Stock Exchange.

(Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Prem Udayabhanu)